Apgar, D. 2011. Assumption-based metrics: Recipe for success. Strategic Finance (November): 26-33.
Note by James R. Martin
Balanced Scorecard Main Page | Performance Measurements Main
The purpose of this paper is to outline an alternative to the balanced scorecard. Apgar begins by stating that surveys show 47-70 percent of executives are dissatisfied with their balanced scorecards because they include too many irrelevant factors. He recommends assumption-based metrics as a more powerful alternative because it allows for testing and revising various strategies. In addition he provides an assumption-based metric software application referred to as GoalScreen. The application includes several steps.
These steps include the following:
First, set a target or goal and list every major assumption needed for a successful outcome including those that are controllable and those that are not controllable.
Second, choose a metric or driver (root cause) for each key assumption that has high impact and independence. Note that impact and independence make the metric or driver predictive.
Third, for each metric or driver, list the expected outcome, a worse-case outcome, and a worse-case impact on the target or goal. Then rank your assumptions by worst-case impact.
The next set of outcomes show if your assumptions were justified. If not, adjust them and keep testing.
For more information on the GoalScreen application see http://goalscreen.com